Malawi Confederation of Chambers of Commerce and Industry (MCCCI) and former chief economist at the International Monetary Fund (IMF) Godfrey Kalinga have disputed the country’s growth figures, saying they are not a true reflection of the local economy.
MCCCI Chief Executive Officer Chancellor Kaferapanjira said this on Monday during a pre-budget consultation meeting held by the Ministry of Finance and Economic Affairs official in Blantyre.
Kaferapanjira argued that for an economy whose gross domestic product (GDP) is at K10 trillion, growth must have been hovering at around 10 percent because the economy is small.
He added that for a country whose population growth per annum is around 3 percent, economic growth should have been above that and the opposite means the economy is not growing.
“Malawi’s economy has a small base and when you have a small base economy, its economic growth must be higher but if the base is small and the percentage growth is even smaller, it means we are rescinding, we are going backwards,” Kaferapanjira said.
In an interview, Kalinga said there is no direct connection between the size of the economy and its growth, but was quick to point out that the economy is, indeed, not growing in line with aspirations of alleviating poverty.
He said the growth is premised on a lot of factors and it would be difficult for the local economy to grow more than anticipated because hindering factors have not been eliminated.
“Corruption levels are still very high, there are no investments, the exchange rate is volatile, the export sector is not performing. Therefore, there is no sector in the country that can drive the economy to grow, which simply means that there is no basis for it to grow,” Kalinga said.
During the meeting, Minister of Finance Sosten Gwengwe said even though the economy has slowed due to many economic factors especially in recent years, there is hope that its growth will be meaningful going forward.
“Things that have given us headache such as inflation, exchange rate disturbances and other factors will be dealt with because we have put different measures and these will translate into higher economic growth,” Gwengwe said.
The Malawi economy is projected to grow by 2.6 percent in 2023.
World Bank estimates suggest that Malawi’s GDP growth has slowed to 0.9 percent in 2022, a decline from 2.8 percent in 2021.
This constitutes a per-capita GDP contraction of 1.8 percent given annual average population growth of 2.7 percent.
A recent Malawi Economic Monitor published by the Bretton Woods institution indicates that external shocks, in particular the impacts of the Russia- Ukraine war, as well as a worsening balance-of-payments crisis caused by sustained fiscal and external imbalances, are at the core of the recent economic slowdown.
“The worsening balance-of-payments crisis has led to an acute foreign exchange shortage, affecting all those producers that import inputs, and causing shortages of fuel and other essential goods. The effects on the retail fuel sector are only the most visible symptom of much wider challenges,” the Mem reads.
Justin Mkweu is a fast growing reporter who currently works with Times Group on the business desk.
He is however flexible as he also writes about current affairs and national issues.